NCBFAA protests Customs plan for disciplining brokers

Wednesday, May 01, 2013

The National Customs Brokers and Forwarders Association of America has come out against a U.S. Customs proposal to improve due process procedures for suspending a broker's entry-filer code, saying that going after the code is a back-door way of trying to take away a broker's license and is unconstitutional.
Customs and Border Protection has been frustrated for years with the amount of time it takes to deactivate filer codes for problematic brokers. In a Notice of Proposed Rulemaking on Feb. 26, CBP explained how it intends to revoke entry filer codes as well as loss of privileges to use immediate delivery and remote location filing procedures for customs entries, along with some due process provisions.
The rulemaking is a reaction to the agency's 2010 attempt to suspend a broker's entry-filing code without providing notice of the proposed action. The eligibility requirements for brokers to participate in certain programs requiring entry-filer codes are akin to obtaining a license and therefore fall under the jurisdiction of the Administrative Procedures Act, which requires an agency to provide written notice about any license revocation and give the party the opportunity to achieve compliance. CBP proposes to give brokers 10-days notice of any action for misuse of the entry-filer code and the opportunity to appeal the decision before suspending privileges. In cases of willful disregard of the regulations or that pose a risk to public health, safety or interests, a port director could immediately pull a filer code and the broker could appeal afterwards.
Loss of an entry-filer code is essentially a death sentence for a licensed broker because the three-character number assigned by CBP is required to electronically file entries through the Automated Broker Interface system. The code prefaces the entry number that a broker or importer files into CBP's database. Importers are unlikely to hire brokers that are only able to file paper entries on their behalf and can't get their goods quickly released.
Immediate delivery permits allow perishable goods, shipments crossing land borders, and certain other goods to be released and delivered before submission of a formal entry. Remote location filing gives brokers with a national permit the option to electronically file certain entries in a port other than one in which the goods arrive and the broker has a local presence.
The NCBFAA, in comments filed with Customs as part of the rulemaking process, said the proposal fails to provide accused brokers with adequate due process protections even though that is the ostensible purpose of the proposal. The trade association contends that the entry filer code is an inseparable component of a broker's license and cannot be suspended or revoked without following more stringent due process requirements.
"CBP's proposal to allow for the rapid or immediate suspension or revocation of entry filer codes is an extraordinary remedy for which CBP has not established a need,” according to the NCBFAA’s filing. "Absent a situation where CBP could demonstrate that an entire enterprise was involved in a coordinated scheme to put the public health and/or safety at risk, it is difficult to imagine a scenario which would justify such an extraordinary and catastrophic result."
CBP should clearly define the condition of "misuse," under which filer code suspension or revocation may be effectuated. The protections afforded to entry filers should include, at a minimum, a probationary status as an interim step prior to suspension, as is afforded to Automated Broker Interface participants, the NCBFAA said. “We also disagree with CBP's determination that the proposed regulations will not have a substantial impact on a significant number of small business entities,” the NCBFAA argued, “and we request that CBP conduct a regulatory flexibility analysis as required by the Regulatory Flexibility Act to determine the viability of alternative proposals that could accomplish similar goals without the threat of economic catastrophe.”
The trade association asked Customs to revoke the portion of the NPRM which addresses the suspension or revocation of a licensed broker's entry filer code. - Eric Kulisch